tv Fareed Zakaria GPS CNN January 15, 2012 10:00am-11:00am PST
candidates and take a lot of those ideas and incorporate it into a platform that will unite us. >> chiming in from a universe entirely different than demint's, democratic leader harry reid predicted today that as the economy grows stronger, the tea party will die out. and that's today's "sound of sunday." thank you so much for watching. i'm candy crowley in washington. fareed zakaria is next. before we go, a moment we wanted to share. earlier this hour, national park rangers and the king family placed a wreath at the mlk memorial in washington to mark what would have been the 83rd birthday of the civil rights leader. this is "gps," the global public square. welcome to all of you in the united states and around the world. i'm fareed zakaria. a terrific show we have in store today. we begin with what is still the biggest most important story in the world, the economy. two of the world's top economists, paul krugman and ken
rogoff with differing perspectives will tell us what they think will happen in america, europe, the emerging markets in the year ahead. after that, why in the world is the price of oil so high when the global economy is so troubled? we'll explain. next up, iraq. the nation is on the brink of disaster according to its former prime minister, allawi. i will talk to him about iraq's trouble. and then we'll ask two participatants whether the iraq war was worth it. an important debate. first here's my take. finally it looks like former massachusetts governor mitt romney will win his party's nomination, so republicans are following a familiar pattern. they are nominating the mainstream candidate who's waited his turn, the guy who ran once before. this is the party, after all, that had a bush or a dole on its ticket for about 20 years. it's also a party that nominated richard nixon on its presidential ticket five times. republicans don't like
surprises. but there is something surprising about this primary. it's the charges that are working against romney. see, romney's opponents have tried to change his upward trend at two levels. first, they called him a massachusetts moderate. but that didn't seem to work. not sure why people perhaps think that romney is more electable because he's moderate than his opponents once it gets to the general elections. but a second line of attack does seem to be gaining traction. that of romney as job killer. ronlny is the private equity guy who buys companies, hollows them out and then outsources jobs. >> a story of greed playing the system for a quick buck. >> it's viking this attack is coming in a republican presidential primary. after all, what romney did while at bain capital was classic capitalist raetive destruction. he took over businesses, tried to make them more productive. to do so he often had to shed jobs. in other companies startups like staples he created jobs. americans should be celebrating his work as an example of how the market functions, driving
out inefficiency, generating productivity, creating a lean, mean cappalist machine. but something has changed in america. even in the republican party, there is a huge concern about what globalization and technological change are doing to the average middle-class american. there is a sense that the system is not working for the median american worker. if you look at job creation over the last 20 years in america, you will note us that we haven't been able to create any jobs in what is called the tradeable sector of the economy, those jobs that are subject to global competition. the jobs we've created have almost entirely been in industries like health care, government, construction which are basically local industries shielded from global competition. you can't outsource the building of eye new york skyscraper to a chinese worker. you can't outsource a nurse. the other great force coursing through the economy, technology, has created new companies, but it's had a mixed record in creates tens of thousands of new jobs. note this is not a partisan
point. we've netted no new jobs in over 20 years. that's under obama. under the bush years with tax cuts, under clinton with balanced budgets and deregulation. most americans sense that we're in a new world. romney's opponents are taking advantage of this anxiety in their attacks, but none of them really have answers to deal with this problem. simply talking about cutting government spending isn't going to make the american worker more competitive in the face of these challenges from technology from globalization. hopefully during the general election we'll have a real national debate about how to create jobs in america. now, before we get started, i have great news for you. gps is back on itunes. if you ever miss a show, just go to itunes.com/fareed and you can buy it or subscribe and make sure you never miss one again. okay? let's get started.
eye much why much of the media was focused on a tiny town in new hampshire, everyone knows the elections won't be determined by those results. they'll be determined by what happens in the economy and to talk about that i'm joined by paul krugman of "the new york times" and princeton university and ken rogoff of harvard university. let me ask you about a column you wrote in which you talked about mitt romney and bain capital and the fact that he had not created a lot of jobs. he had destroyed them. it struck me that it was somewhat unfair because bain capital seems to be of all the private equity companies not one of these companies that loads on a lot of debt on its -- on the companies it takes. it often acts as an early-stage investor or almost more like a venture capital company. steve ratner who is a democrat, worked for obama, says that actually, if you look at bain capital's record, it's quite
remarkable. it's mostly about having spotted successful companies and steered them well. what do you think? >> i think if what i actually did, i said it's actually wrong to think about bain as having created or destroyed jobs. on balance, it led to the destruction of the good jobs and replaced them with jobs that are worse. no different. this is what private equity has done to a loorge larger stint i u.s. economy. i don't think bain stands out as a bad member of that industry. but that industry is doing stuff that is good for corporate bottom lines but not terribly good for workers. the main point is that romney is saying i should be president because i know how to create jobs. and he actually does know how to make a lot of money in private equity which is not at all the same thing as creating jobs. it's not at all the same thing as what's involved in running macroeconomic policy. the main point is not that he wasn't especially private equity investor. we don't think so. it was that it has basically zero relationship to what he
would have to do as president. and it's an industry that has a somewhat mixed -- the industry has arguably not been one of the things that -- whose overall impact has been positive on america. >> let's talk about the big issue which is going forward, what the economy is going to look like, and what the debate is going to be. paul, you had a column and a striking graph where you point out that if you would ask yourself what has the market told us over the last three years, you know, the market's verdict has been that the united states which engaged in a big stimulus program and then the fed did quantitative easing and quanti quantityative easing, it has fallen. >> that's right. they're paying to keep their money safe. we're suggesting that the market is not at all worried about u.s. solvency. it would suggest that even leaving aside the whole question of multipliers and will you can create lots of jobs, this would
be a good time to be doing public investment because you can borrow the money for zero or negative cost. so it's a pretty spectacular contrast with the rhetoric in washington. listening to the discussion in washington, you'd think that we're on the verge of a debt crisis that we have an intolerable crippling deficit, but the market, people are actually putting money on the line, are saying actually, you know, we're not worried about that. and we can't see any better use for our money, so here, please take it. >> ken, what do you say to that? because it is now three years. it's not a few months. and the train is pretty consistent. and you can't say that this is like subprime or something that people didn't know about. this is all we've been talking about for three years. and yet the interest rate keeps dropping. in other words, the market is saying, you know, we're not worried about an american debt crisis. what we're worried about is very slow growth in the united states. correct? >> well, i mean, for one thing, interest rates are not an incredibly great predictor of what's going to happen in the future.
iceland was borrowing at very low interest rates in 2006. this has been studied a lot. and it's hard to find evidence that they really can predict what's going on. and, of course, debt levels are surging. not just the united states, but across the advanced countries. i think it's really important not just to look at public debt but to look at the total picture on debt which just looks like nothing we've ever had before. we're already at general government debt above world war ii. if you throw in public debt, which becomes public debt, we're very familiar with that. i don't think it's nuts to be worried about debt and just point at the interest rates and say, well, this isn't a concern i think it too easy. >> if i can -- first of all, i that the relevant thing here, what i've been doing is looking a lot at japan, which japan in the '90s was kind of a dress rehearsal for us now. and japan has been subject to people warning of an imminent
debt crisis for a long time now. s&p downgraded them in 2002, and nothing happened. which is why some of us successfully that when s&p downgraded america, nothing would happen. of course, there are risks. there might be something that we don't know. it may be that although japan was able to get up to gross debt to 200% of gdp and still borr borrowing at less than 1%, maybe the u.s. would be different than that. that's the potential danger that is not apparently weighing very heavily right now. and the fact is meanwhile, we have massive unemployment. we have -- you know, how heavily do you weigh something that might happen but that history kind of suggests probably won't happen very soon against something that is against the clear and present damage that's being done by a weak economy? when we come back, we're going to continue this. and i want to ask two things. one is what you think your best prescription would be for the president. but also, the u.s. economy is going to be determined by something outside the u.s. which
is europe. and paul krugman and ken rogoff are going to solve the european crisis when we get back. shhh. i'm researching a role. today's special... the capital one venture card. you earn double miles on every purchase. impressive. chalk is a lost medium. if you're not earning double miles... you're settling for half. was that really necessary? [ male announcer ] get the venture card at capitalone.com and earn double miles on every purchase every day. what's in your wallet? cover for me. i have an audition.
and we are back with economist paul krugman and ken rogoff. so your prescription to president bvobama, i take it is run on investment. run on the idea that you're going to borrow more, spend more, that that is what the economy needs right now, not worries about the deficit. >> yeah. and i think in a way, we may -- we may be approaching a somewhat advantageous position authorize that. i think it would have been the right thing to do all along, but there are signs that private demand is starting to get some traction. you know, for one thing, we've had our housing bust has gone on so long, that we appear to be underhoused. we're short on units. people can't afford them because there's no jobs. but if we had higher employment,
you could imagine a reinforcing cycle of growth, but it won't happen if we're pursuing austerity and thwarting any recovery whereas right now is about the time or next year when a push could be the thing that tips us into a self-sustaining recovery. >> what would you advise mitt romney -- i don't know if you are advising -- >> i'm not. >> what would you advise him to run on? what would be the kind of right-of-center platform in >> a right-of-center platform. i actually agree on the point of doing infrastructure spending. but i don't think it's just about increasing aggregate demand, which i'm much less impressed about i that argument because this has gone on so long. why hasn't the market cleared? i believe in keynesianism for a year, two years. this has been a long time. and i think infrastructure spending would be good, education. but you want to do it well. there need to be new ideas. i mean, i'm not saying president obama hasn't offered them, too, both sides. we need to do infrastructure
spending that gets infrastructure built at a reasonable price, something we need to go, something we need to do. if we're going to spend money on education, it can't just be paying more to get the same thing done. there's a lot of ideas out there. and i feel it's been a very static debate. and it's -- you know, paralysis in washington, but there are things we need to move forward on, running things better than we do. >> how do you create jobs in the tradeable sector? in other words, you know, everything people talk about sounds to me like infrastructure jobs, construction jobs, health care will go up no matter what we do, maybe some government workers. but the thing that the american economy used to legendarily produce lots of, these manufacturing service jobs, high-paying jobs, that is where the trend has gone down for 20 years. and how do you revive that? >> i don't think we will on manufacturing. i mean, agriculture used to be more than half the people working in agriculture, now it's
a couple percent. manufacturing is trending down i think for similar reasons. there are export jobs in service industries where we have the rule of law information technology, things like that where i think our future lies. the world has changed. >> so let's talk now about the place that can throw all of this in turmoil. europe. in the european case, paul, i take it -- i mean, i understand that the argument that people now are understanding that you can't just have savage austerity programs and expect everything to bounce back because this economy is going into downward spiral spirals. but it seems like in many of those countries, they were having difficulty borrowing. and if they don't do something to convince the markets that they're getting their fiscal house in order, their borrowing costs will go to 7%, 8%, 9%. are they in some kind of catch-22 that they can't get out of? >> yeah, it's actually worth noting that essentially nobody
has managed to regain the confidence except for latvia. even the best austerity programs are not giving confidence back. i think the answer to this is that the debtor countries in europe cannot solve this on their own. if it's only about -- if the only policy in europe is austerity in southern europe, then that's just a losing proposition. they're going to depress their economies enormously. they're not even going to do as much about reducing their budge deficit because the economy is depressed and so is the tax revenue. >> and it's not going to work. >> it's not going to work. so they need help. the only way you can save the euro is for there to be expansionary policies at the europewide level and some inflation that makes this a tolerable adjustment. >> which means the european bank should do what the fed did which is quantitative easing. >> yes.
we can manage probably with 2% or 3%. they probably need 3% or 4% to make this workable. >> would you agree with that? >> actually, i do on inflation. i think it would be helpful here and there but the germans don't want it. the difference between german quantitative easing, it's more like we're buying california debt and illinois debt. it's complicated. they are running this union without a real constitution as if we lived with the articles of con federation and we were trying to run or government with that. they need to fix that. they're pouring water into a leaky bucket. and probably i think a couple of the countries at least probably need to go on sabbatical from the euro because they're just not competitive. i don't think it can work within their framework or anything close to it. >> you know, when i'd look historically at countries that get into this problem, it seems like the only thing that seems to work is you get your labor more competitive. >> absolutely. >> and you depreciate your currency which is related.
paul has this great chart about, again, why don't you explain. it's basically how rates went down. and it's the four countries he looks at, u.s., japan, uk and sweden all have control over their own country and in effect have printing presses. >> the one i find really amazing is denmark which has lower borrowing costs than finland even though they look equivalent. denmark has its own currency. they're not getting themselves any flexibility, but everybody knows that they have those printing presses if they need them. that's the difference. >> if italy had its own printing press, meaning it had its own currency and own central bank, nobody would worry about italian debt. >> not entirely true. we used to worry about italian debt back in the day, but it would be very difficult. their labor costs would be in line. they would not be subject to these kinds of speculative attacks by people who think that basically people who are selling italian debt because they're afraid that other people are going to sell italian debt. the imposition to do it.
>> it's a little like a couple living together. they're not quite sure if they want to get married. let's try out having a checking account together. that's basically what they've done except it's not just a couple, it's 17 involving first cousins, second cousins, third cousins. and it just is not a workable system. i think that's what people see. >> on a probability basis, how likely is it that the euro blows up this year? you have $1 trillion of european debt that has to be rolled over this year. >> i think it's not this year that it's going to happen. they're finding ways basically by having the european central bank buy everything to push it out into something bigger and worse down the road, raising interest rates, raising problems. but they have the capacity to have the european central bank buy stuff. and if that's happening indirectly, it's buying the debt, that can go on for a while. i think it will not be decisive in our election. >> probability of a blowup over all this? >> i don't think there's going to be a blowup in europe this year, but there will be a
recession, and that will, in fact, hurt us. so it is going to be a drag on the u.s. economy. you know, it may not be enough. there are -- there is some sign of developing strength in the u.s. economy. but there's going to be -- i think it's going to be a fairly nasty recession in europe. i think people think it's going to be short and shallow. why would it be? but yeah, i think the big blowup -- i'm not sure the big blowup will ever happen because in the end, you know, the prospect of hanging concentrates the mind. a collapse of their greatest initiative ever may make the europeans do what needs to be done eventually but not before they absolutely have to. >> on that note, ken, paul, thank you very much. coming up next, a curious economic problem that impacts your bank balance, when demand drops and supply stays constant, prices should fall, right? but oil prices are soaring. what in the world is going on? next. ttd# 1-800-345-2550
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the euro zone has stalled. china and india are slowing down. so demand for oil worldwide is low. so why is oil trading at $113 a barrel? more than twice the price it was trading at five years ago when the global economy was booming. what in the world is going on? there's a school of thought that suggests the global economy is doing better than we think. china and the u.s. are proving resilient to europe's problems. and so traders are expecting renewed demand in the world's two top economies. but another school of thought argues we're in the midst of a bubble. speculators have been driving up the price of oil and eventually it will crash. now, i think that the economic fundamentals really can't justify oil prices at their current levels. the real driver of high oil is not the stuff you find this the business section of the newspaper. the demand for oil in india or china.
it's on the front pages, global politics. you see, traders worry about risk. and the biggest risk to oil supplies is the threat of war in the persian gulf. meanwhile in nigeria, mass protests are raising worry about the fuel supply from there. venezuela is in a slow-motion collapse because of chavez's mismanagement. there have also been protests in russia, the world's top oil producer. and remember, the fallout of the arab spring. libya's oil production in 2011 was severely curtailed. iraq continues to disappoint with its oil output. and its recent political tensions certainly haven't made things any better. so a mix of war rhetoric and local troubles in key oil states are factors driving up the price of crude. and that translates to higher prices at the pump. now, that logic suggests that prices will fall when the news comes down. maybe from iran and from russia. but perhaps not. perhaps oil producers want these
sky-high prices. usually the major oil producers understand that keeping prices too high in the short term means people start finding alternatives to oil. they start driving more efficiently. they start looking for alternative energies. but this time oil states face crucial challenges. look closer at the arab spring. the only oil-rich country that has been forced into regime change is libya. why? the gov states lavish subsidy and salary increases on their citizens. they've upped spending to record levels to suppress any popular discontent. i saw some striking numbers this week. look at the break-even costs for the world's top oil producers. that is the minimum price at which these countries need to sell oil so that they can balance their budgets. russia now needs oil at $110 a barrel to manage its finances. for iraq, the number is $100. even saudi arabia now needs oil
to trade around $80 a barrel just to balance its budgets. the numbers are also high for algeria, qatar, oman. only a decade, saudi arabia was able to balance its budget with oil prices averaging around $25 a barrel. so now it is in these countries' interests to keep oil prices high, which they do by curtailing supply in one way or the other. this is perhaps the most lasting impact of the year of global protest. high oil prices. so bottom line, an oil crash seems unlikely. even though the engines of global growth are sputtering, be prepared for a period of expensive commutes. maybe it's time to trade in your suv for a prius. and we'll be right back. [ monica ] i'm away on a movie shoot
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ayad alalawi has served as interim prime minister. he's now the leader of one of the main political parties. he is a rare secular figure in iraqi politics. he joins me now from baghdad. iyad allawi, thank you for being on. let me start with a question not directly related with iraq. when you were prime minister, you had to deal with iran, and so you have some sense of that government. do you understand what is happening in iran right now? do you feel that there is a real danger of some kind of confrontation with the united states? would they shut down the straits of hormuz? >> i don't think they'll go that far. however, they are using this as a rhetoric. but iran needs to change its attitude. it needs to change its performance in the region, i
think. they should be less threatening. they should reconsider their policies. otherwise what iran is doing can lead also to greater risk in the region. >> tell me about iran's influence in iraq. but there are many people who believe that the iranian regime retak retains a great deal of influence, the two political parties, the prime minister's party and the other one, are both heavily influenced by iran, have received funding. is iran playi ining an increasi role in the politics of iraq? >> definitely, we can see this very clearly. we have seen it after the elections immediately when iran used its influence and dictated what kind of government there should be in iraq. they put a red line against me and against the iraqis.
and unfortunately the united states went along with what iran desired. and we want this interference in iraq's affairs is going to lead the country, iraq, to a larger and more significant problems in the future. and this is what's happening now. >> how is the domestic situation in iraq going to end up? the prime minister is trying to arrest the vice president. the vice president has fled to the kurdish areas. how will things resolve? >> well, let me tell you, frankly, there are the los lot problems now. the whole situation is very tense. sectarianism is coming back in force in this country. i think iraq is passing through the most dangerous phase
throughithrough i its history now. and i have warned in the very early days, in fact, years ago that sectarianism and having a vacuum and having a political process which is not inclusive can only destroy the future of this country. and we need and still need an inclusive political process and full-blown institutions in this country. unfortunately, they do not exist. president obama said very clearly that the united states have left iraq as a stable and democratic country. it's not very stable nor democratic, frankly speaking. the terrorists are hitting again very severely. al qaeda is now fully operational in iraq. we request see with the various explosions that are claiming the lives of innocent people every day. and we are seeing the
unconstitutional behavior of the government. >> do you want us back? do you think there is a scenario in which the united states can return to iraq with some military presence? >> the united states, frankly, still have a lot of leverage on iraq. it still has a lot of good will. and the united states have political as well as moral responsibility to help this country to pass through this very difficult phase. and as part of the world leadership, the united states must do something to help iraq. i am not asking for the american forces to come back but for the united states to use its diplomat diplomatic through the strategic agreement between the united states and iraq to try and bring about sanity to the political process and inclusivity. and i think there should be
discussions with the prime minister between him and between the administration to make it very clear that what is happening in iraq is not acceptable. and there should be a way forward by getting inclusivity to the political process and by adhering to the constitution and respecting the constitution. >> ayad allawi, thank you so much for joining us. always a pleasure. up next, was the war in iraq worth it for america? we have a debate. stay with us.
we're back to talk more about iraq. nearly a decade on, what has america accomplished? was the war worth it? joining me now, max boot, a military historian, a senior fellow at the council on foreign relations, and sometime adviser to general petraeus. and peter has had a long career in diplomacy and has written two books on iraq including "the end of iraq: how american incompetence created a war without end." max, i know you're a compassionate supporter of the end of the war and general petraeus. >> i'm also a critic of the way
it was conducted for the first few years, i might add. >> but when you look back, though, $1 trillion, however many iraqi lives, 4,000 american lives, what did we gain? >> i think we gained an opportunity but whether or not we take advantage of that opportunity, i would say no. there's no question that the cost of the war has been high in both blood and treasure, but that's been true in our history. take the korean war. you could have said in the 1950s, what did we gain out of the korean war, a divided peninsula and 38,000 dead, huge cost. but today south korea is a paragon of democracy. it's the dengt welliest country in the world. and so the outcome looks a lot better than it did 50 years ago. if iraq were to develop -- >> but the south koreans, just to keep that analogy, we always had a south korean alli ally th desperately wanted the united states, that modelled our influence, that took enormous
amounts of advice, aid and assistance. the iraqi government is openly anti-american, they've refused to pass the agreement that would have allowed the u.s. to stay and much of iraqi politics is conducted on a kind of anti-american basis. so where is the analogy? the problem is that we didn't -- we don't have a south korea. not as south korea in 2011 but a south korea circa 1953. >> well, i think that's an oversimpification. even in the case of south korea, there was a lot of anti-american sent i sentiment. sometimes for good reason, they blame us for overthrowing the previous regime and not imposing law and order which was a legitimate charge. there's also widespread speculation that iraqi politics that any need us. >> peter, how would you answer the question? >> well, from the point of view from iraq, i think actually the
country is better off after all. 60% of iraq's people are shiites. they were brutally repressed from the founding of iraq until the day that saddam hussein was overthrown. today they now run iraq. they are not pro-american. in fact, baghdad is now tehran's closest ally in the world. but that really reflects what the shiite population wants. and another 20% of iraq's population are kurds. they have dreamed from the founding of iraq to the present moment of having their own independent state. and today, they basically do. they have their own parliament, their own army. their own judicial system. you don't need a visa to go to kurdistan, but you do to go to iraq. it is, except for having a flag at the u.n., it's an independent country. so they're delighted. of course, they were also spared almost all the violence. it's a small segment of the iraqi population, the sunnis,
and even only part of them, that are worse off. but the question is for the united states. was this worth $1 trillion? 4,000 dead and many thousands more permanently injured? to do what? to go into iraq and to leave a situation where we have a government in baghdad that is closely alied with our number one adversary in the world, iran. we also did great damage to the prestige of the united states, to have argued that we had to invade because of iraqi wmd, and then none existed. the incompetence of the occupation, particularly in the early period. the spectacle of the united states standing aside as baghdad was looted. all of these things damaged america's standing in the world. and these resources. the resources that the trillion dollars has added to the national debt. there are also national security resources that might have been -- we might have devoted to
other problems. >> how would you respond to this issue of the time, the distraction, the mind share of the american foreign policy establishment of resources were all devoted to iraq for a decade? >> well, there's no question that we took our eye off the ball on some areas including afghanistan, but i would argue that as a great power, we should have the ability to operate in more than one theater at once. and i don't think there was anything necessarily inefvitabl about the outcome in the early years in iraq. certainly we went into the war based a misapprehension about saddam to try to enhance his aura of power. that backfired against him. and then we initially had success which turned into a catastrophic failure because we did not send enough troops to stabilize the situation and impose the kind of near-term regioncy that we did in places like bosnia and kosovo. that was a huge mistake. and i think the bush
administration deserves blame for making that mistake and then not realizing the error of its ways until 2007. but then in 2007, we did change policy, did implement the surge. violence plunged more than 90%. and iraq has since then has had a semi-functions democracy. but what's happened since is in the last few months since the withdrawal of american forces, the mitt cal force is once again screeching to progress since 2007. we have created the opportunity to create a functioning democracy in the middle east and one that i don't think is necessarily a cat's paw, the irani iranians, but now we're losing that opportunity, because we're losing influence by taking our troops out. we are handing iraq to the iranians and making it much more likely that democracy will cease to function. >> let me press you on the iran issue because it isn't really that clear that the iraqi government is tehran's closest ally. they've been somewhat accommodating on the syrian
issue, but other than that, the iranians ask for the most favored trade status. they didn't get it. they maintained pretty close relationships with the united states. the iranians haven't gotten any special deals on oil. i mean, will national interest and national rivalries insure that iraq has a healthy degree of -- after all, most iraqis remember iran as a company that they fought an eight-year war with. >> well, the iran-iraq war, you know, was something in which you had a sunni dictator and sunni general sending shiite foot soldiers to fight, but when the elections were held in iraq in 2005, the first free elections -- and they were very much free elections. the shiites in iraq voted almost unanimously for the two political parties that were supported by iran. dawa and the supreme council for the islamic revolutionary in iraq,
which was founded in iran, and there are very close ties. look at the proposed sale of f-16 aircraft to iraq. iran doesn't object. in fact, i think they're delighted. they might even get access to the technology. turkey doesn't object. the kuwaitis i think are quite scared, but they aren't saying anything. the people who are really concerned and speaking out are the kurds. iraqis. they are afraid, given the history of that country, that the weapons will be used against them, and i suspect the sunnis are also quite nervous about it. >> we have to close on that. max boot, peter, thank you very much. we will be back.
today we'll take a trip to italy for our question from the "gps" challenge. the question is according to a report released by an italian business group this week, which of the following is now the biggest bank and the biggest lender in italy? is it, a, the vatican, b, the mafia, c, silvio berlusconi, or, d, the coins in the trevi fountain. stay tuned, we'll tell you the correct answer. go to cnn.com/fareed for ten more questions.
while there check out the rest of the offerings on our global public square website. there's always fresh content, insight, and analysis on what's ghog the world. don't forget you can follow us on twitter and facebook. by the way,on that front, i have a very exciting announcement. if you ever miss a show, you can now find full video episodes of "gps" for sale on the itunes tv store. go directly there by typing itunes.com/fareed into your browser. you can get them individually or you can subscribe and get ten shows in a row for less than $1 a show. this week's book of the week was written by max boot, my guest from earlier, and whether you agree with him or not on iraq, his book "war made new" technology, warfare, and the course of history is worth your time. it's a sweeping look at how the west has been so successful in warfare over the past 500 years, but also points out how technology has really been at the heart of so many important turning points and turning trends in history.
now for the last look. this is certainly not my idea of fun, but the south korean soldiers sure seem to be smiling as they frolic half naked in the snow. just letting off some steam after the racheting up with tensions to their neighbors to the north? nope. these special forces soldiers are actually preparing for war with north korea. about 250 of them this week were embroiled in these tests of raw endurance to prove themselves in war-like conditions. half naked soldiers did push-ups, skied with their rifles, and took a dip in icy cold water. all to test their physical and spiritual abilities. not to be outdone, female members of the special forces also joined in on the military exercises. but they got to keep their clothes on and presumably stay a little warmer. the correct answer to our gps challenge question is, b, the mafia is the king of banking italy, said to be making over $200 billion in profits a year
on loans of $83 billion. you see, family businesses can still thrive in the era of big box stores. thanks to all of you for being part of my program this week. i will see you next week. checking our top stories, more information now on that grounded cruiseliner in italy. two more bodies have been found in the wreckage, that makes five people now confirmed dead since the ship ran aground and sank near an italian island. more than a dozen people are still unaccounted for. some passengers made it to safety by jumping for it. >> they only had rafts left, but the angle of the boat was so steep they couldn't get us out. they brought us to the down side of the ship close to the water, and we -- they had a life raft they blew up, but it got caught under one of the cranes and the boat started moving very quickly. there were maybe 200 people